![]() ![]() A capacity or other portion of an asset that is not physically distinct (e.g. Ī capacity portion of an asset is still an identified asset if it is physically distinct (e.g. A supplier’s right of substitution is only considered substantive if the supplier has both the practical ability to substitute alternative assets throughout the period of use and they would economically benefit from substitution. However, where a supplier has a substantive right of substitution throughout the period of use, a customer does not have a right to use an identified asset. Īn asset is typically identified by being explicitly specified in a contract, but an asset can also be identified by being implicitly specified at the time it is made available for use by the customer. Ĭontrol is conveyed where the customer has both the right to direct the identified asset’s use and to obtain substantially all the economic benefits from that use. Ii) leases where the underlying asset has a low value when new (such as personal computers or small items of office furniture) – this election can be made on a lease-by-lease basis.Ī contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. I) leases with a lease term of 12 months or less and containing no purchase options – this election is made by class of underlying asset and Instead of applying the recognition requirements of IFRS 16 described below, a lessee may elect to account for lease payments as an expense on a straight-line basis over the lease term or another systematic basis for the following two types of leases:
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